Friday, February 28, 2014

Coke plans sustainable social development

One of the top global brands in 2013, Coca Cola is manufactured in Nepal in two places at Balaju – by the Bottlers Nepal (Balaju) – and at Bharatpur – by the Bottlers Nepal (Tarai) – both of which are listed companies at the Nepal Stock Exchange (Nepse). Bottlers Nepal (Balaju) has listed 1,948,787 units, whereas Bottlers Nepal (Tarai) has listed 1,210,000 units of shares at the Nepse. Both the shares have been trading at around Rs 1,700 per unit at the stock market. Coca Cola that has come to an existence some 127 years ago is a multinational company and popular around the globe. Coke's country manager for Bhutan and Nepal Shadab Khan speaks about the company's plan, CSR activities, market and quality;

How is the market of cold drinks in Nepal?
Khan: I think the market is extremely buoyant. Personally from Coca Cola stand point of view I am extremely excited about the opportunity. We just made $26 million investment last year in Bharatpur. That only shows the commitment we have for the market and what we think of the market is going to be. So the market for us is growing and continues to grow.

Will there be any difference in company's policies from past years to next year?
Khan: I think from a market perspective, consumer preferences are getting more and more evolved. But at the same time you have a lots of Nepalese who have not tasted a beverage once a year. So from that perspective, its going to be an interesting challenge for companies like ourselves to be able to play that differently across metro Nepal, which is all the top 12 towns and places where we already have distribution. Worse is rural Nepal. So our focus is going to be how we will ensure more and more places that we can reach and ensure more and more Nepalis have 'a sip of happiness' as we call it.

Market expansion is one aspect, whereas equally important is ensuing quality. Mostly in the rural parts there has been complaints about the quality. What is the company's strategy to supervise and monitor quality regularly across Nepal?
Khan: Quality for Coca Cola is paramount. We have reached here because extremely quality focused and quality sensitive. We have an extremely robust mechanism for ensuring good and safe quality products. There are two aspects to quality. One is quality within and how you manufacture the products. We are ensuring the state of the art technology that goes in. Our $26 million plant is a testament to that, apart from the best equipment we put in to manufacture and processes that we do have, which are regularly audited. Our audits are not scheduled. We don't tell you that I am coming. Our auditors just land up on the door and they open and start checking. Its always a surprise audit, which ensures that quality. We call ourselves 'audit ready system'. That's the simple matrix around to ensure quality in all our products and all our factories. We have global standards. There is no different standard from Africa or US or for Asia. It is the same quality of product that you get every where around the world. One you have to ensure what you do is water tight and the second aspects is what we do in market. There are more compliance checks again. We fix the basics and then ensure that what you do in the market. We have a full-fledged Dual Product Management (DPM) team that is regularly visiting the market. This is different from the Sales Team. Its not the sales guys going there, it’s a quality team that goes in the market and does checks. There is a monthly check that happens from the Atlanta Global Team as well. To check on beverage quality, package quality, what's happening in the market and all of these are fed back to plant to ensure the things are improved. The sale steam does its own checks, its regular monitoring mechanism. From the supply chain team as well, there is what we call warehouse upkeep audit and route vehicle upkeep audit. They check how our distributors ensuring stocks, managed, maintained. And at the end, the last mile, all of us from managing director to sales executive have our personal journey plan (PJP) regularly. We visit the market ourselves constantly keeping the check on what is happning. Even now we are actively picking back products and destroying. And we are now keeping the Department of Commerce posted on steps that we are taking.

How is the competition in the market?
Khan: Competition is strong everywhere. Thankfully because of the love Nepali consumers have for our brands we are strong and continue to gain share. We fully respect competition because unless you have competition in the market, you tend to get sometimes complaisant. Somebody who is on your toes can only ensure that you are doing what best you can.

How is the competition helping you diversify products?
Khan: It’s a question of market dynamics. And what we can do in each market. Apart from Coke, Fanta, sprite and kinly soda, we are looking at other categories that make sense. From a Nepal market perspectives, what we can do efficiently here. We have stared importing Maaza, and cans. Step by step whatever we see as market demands, we tap in like Maaza was only started last year. Every year we look at trying to do something interesting fro the consumers.

Is there any plans to start manufacturing Maaza in Nepal or starting any new plants?    
Khan: I never say no. Right now we have had fantastic response fro Maaza. But for any new manufacturing to start we have to be able to sustain plant investment. Yes, as and when we believe there is potential for us, we start manufacturing locally. About plans for new plant, not that I know of immediately. But we have just expanded our operations in Chitwan. Atleast fro the nest few years, we have more than enough capacity to ensure that we can service our market efficiently.

What do you think CSR activities help establish brands or the companies feel it morally responsible to give back to society under CSR?
Khan: The brand a moral responsibility. As I call it, we are a global company but in local business too. We hire, live, manufacture, distribute locally. We operate in this environment. You could be whoever, operating anywhere but you are operating in this environment. And given brands like us, we have the scope and able to do sustainably something. Therefore it makes imperative for large brands like us to do CSR. We believe in golden triangle. As one company we cannot do everything but government, civil society and our partners come together, that's what we call golden triangle, we can do something. So, corporate civil society and governments can really start to make difference.

But most of the companies do CSR to establish and promote their brands. How is the case with Coca Cola?
Khan: Every company has their own ways of doing things. But Coke does it primarily because we genuinely believe. We have the ability and responsibility to do better. So, sustainability for us is its in our blood. Coke flows in our blood so sustainability also flows in our blood. We don't do things that make difference in our business. We have three large buckets; Me, We, World. Me is for the individual. We do things like supporting marathons, healthy active living programmes whether football like Coca Cola Cup or cricket programme in Sri Lanka and India. In the We part, its about community. As we are a global company with a local business. We operate within a community. We have started a programme called 5BY20, which is our chairman's promise empowering five million women by 2020 across the world. We have launched that programme in Nepal as well. Last year, we have trained 1,015 women retailers on how to run a shop. We also support My School, which is basically a programme where we go and rejuvenate schools. We have done with 13 schools so far between Kathmandu, Lalitpur and Bhaktapur. Over 13,00 students benefitted from the programme. There are five different aspects of the programme like ensuring clean drinking water by water harvesting programmes with Sajha, recreational facilities, sanitation, and ensuring they start to become a good citizen. This rounded development should start from very early ages. In the World piece, we do a lots of things like environment. we are now working with Hamri Bahini, Sagarmatha Pollution Control Committee and Everest marathon. We believe that its our duty in many ways to do it.

What is the CSR budget of Coke?
Khan: Globally we do separate about one per cent of the our profit. In Nepal also we do separate one per cent of profit but the beauty of Nepal is, we also leverage our global funds very well. The Coca Cola Foundation has a lot of foundation money and we try to get as much as we can from that kitty as well. We have started working with WWF on the Koshi Basin, that funding is all from global team. Similarly, we also do our projects like UN Habitat on the safe water project in Tarai to ensure household water treatment. Because one of the biggest reasons for diarrhea is bad quality water. As a responsible corporate operating in Kathmandu, Kathmandu is extremely water stressed, so we tied with Smart Pani for water recycling, which we have always been doing. With Sajha Yatayat in 130 ropanis of land we have started water recycling plant that can recharge almost 10,000 kilolitres of water annually. It will be continued with other partners in other parts of the country too.

Generally multinational companies are said to be interested in third world countries like Nepal only to make money. Is Coke going to change people's perception with all these good work?
Khan: All organisations either local or multinations exist to make money. I don’t think commercial aspect to business is bad. Business needs to have commercial aspects. Besides that business also needs to be responsible. For companies like Coca Cola, its in our blood. We have been doing CSR and not talking about it since we have started 127 years ago. And even today we don't talk much about it. It is something all companies absolutely needs to do. We have reached the position where we can make change we need to do.

What are the three major challenges for business expansion in Nepal?
Khan: It’s a mix of both external and internal. How we ensure more and more consumers make available of our products, that's one key aspect. last year, there has been a fair amount of disturbances due to closure that has impacted our ability to manufacture. Now with new government and Constitution in next 12 months, its going to be better situation. Infrastructure is another bottleneck as getting to some parts of Nepal is extremely costly. Its all a question of time, and all of this is going to be sorted out. For me problems are always short-term. The current challenge is what we can do as a company and make our products available everywhere.

National pride projects fail to perform, under utilise budget

Despite timely budget for the current fiscal year, the government has miserably failed to expedite the development projects that could have not only generated employment but also pushed the economic growth.
The government has been able to spend only Rs 2.82 billion, which is only 12.9 per cent of the total budget Rs 21.85 billion for the total 21 national pride projects.
The national pride projects include large-scale hydro – like 750 MW West Seti Hydropower and 456 MW Upper Tamakoshi Hydropower – irrigation projects –  like Sikta, Ranijamara-Kulariya and Babai – and international and regional airports like Pokhara and Bhairahawa, and highways like Fast Track, Mid Hill Highway and Postal Highway but the delay in implementation, lack of coordination among various state agencies, problems in land acquisition have taken toll in the development, according to the mid-term review of the budget.
The three projects – Bhairahawa Regional International Airport, Second International Airport and West Seti Hydropower Project – have become the poorest performers with no spending, the report stated, adding that the West Seti Hydroelectric Project has not yet completed feasibility study, whereas second international airport in Nijgad has been delayed due to confusion on construction modality.
Similarly, Bheri-Babai Diversion Multipurpose Project – that could also generate 48 MW electricity and provide irrigation facility to 60,000 hectares of land in Bardiya and Banke – has also been able to spend only Rs 3.31 million out of its Rs 1.01 billion budget.
Babai Irrgation Project project was started in 1989 with an objective of irrigating 36,000 hectares of land, and Banke-based Sikta Irrigation Project is expected to irrigate some 42,766 hectares of land. Sikta Irrigation Project has been able to spend around quarter of its total budget of Rs 1.14 billion budget.
Likewise, Ranijamara Kulariya Irrigation Project has spent around 33 per cent of its total budget of Rs 1.25 billion.
Likewise, Kathmandu-Terai Fast Track Project – that has been allocated Rs 500.31 million for this fiscal – has been able to utilise only Rs 3.92 million that is less than one per cent of the total budget in the six month of the current fiscal year also due to private sector's lack of interest in the project. The project was supposed to be constructed in public-private partnership model.
Yet another project that has become a prestige issue for the Asian Development Bank, Melamchi Water Supply Project, has been able to spend only Rs 638.50 million that is 12.18 per cent of its total budget of Rs 5.24 billion.
Of the five components of the Melamchi Water Supply Project, the tunnel – one of the major components – has started after a long disturbance and the project that took 15 years has set postponed the deadline for completion.
The report also stated that the national priority projects were selected without any solid basis. "The numbers of national pride projects increased but they have been just occupying huge resources without implementation,” it stated, adding that Mid Hill Highway has spent 17.12 per cent of the budget in the six months. "Only 1.5-km of track has been opened, with the graveling of one-km being completed in the western sector of the 1,108-km long highway. Likewise, in the eastern section, only four-km road has been graveled with eight-km being black-topped."
The Postal Highway has been able to spent only Rs 153.65 million out of its total budget of Rs 2.21 billion, whereas Budhigandaki Hydroelectric Project has spent the largest above 60 per cent of its Rs 260.99 million budget followed by Pashupati Area Development Fund that has reported some 59 per cent spending, the report stated.
Under utilisation of budget by the development projects is a serious concern for the government," finance minister Dr Ram Sharan Mahat said, addressing the mid-term budget review meeting here today. "If it continues, budget for under-performing projects would be transferred to other projects that are moving smoothly and demanding more funds for their speedy completion.
Surprisingly, all most all of the projects are under multi-year budgetary framework that needs no separate approval every year as they are prioritised.

Nepal holds investment opportunities discussion in Tokyo

Nepali Embassy in Tokyo organised a one-day seminar on Investment Opportunities in Nepal today.
The economic cooperation can bring people of both the countries more closer, said Nepali ambassador to Japan Madan Kumar Bhattarai, addressing the interaction.
Nepal has embarked on a new phase of political development, he said, adding that the successful CA election last November and the formation of a new elected government have raised hopes for a stable government. "The new government gives priority to the economic development."
The government is also keen to facilitate foreign investment creating business-friendly environment, the envoy added.
Highlighting the government's policy and programmes, on the occasion, Nepal Investment Board chief executive Radhesh Pant explained that the government had studied the competitive advantageous areas for growth.
Assuring full support from the board, he also called on the Japanese business community to invest in the areas that have competitive advantages.
Japanese ambassador to Nepal Masashi Ogawa, senior officials from the Foreign Ministry of Japan, Japanese businessmen and representatives of the corporate sector took active part in the interaction.

Government 'still' claims 5.5 per cent growth possible, inflation target revised upward to 8.5 per cent

Despite low capital expenditure and less borrowing from the private sector followed by rising inflation, the government today claimed that it still could achieve the 5.5 per cent economic growth rate targeted by the fiscal policy and supported by monetary policy.
Better performance of the agriculture and service sectors would help achieve growth for the current fiscal year, said finance minister Ram Sharan Mahat at the Mid-Term Budgetary Review for the current fiscal year 2013-14, here today at the Finance Ministry.
"Positive political developments and its impact on investments apart from good agricultural output will also help achieve target economic growth rate," he said, adding that the industrial sector is, however, still poor. "Seven to eight per cent growth is possible only by increased investment and its efficiency."
The five-time finance minister Mahat also lamented the poor investment performance by both the government and private sectors.
"The failure to spend capital budget has swelled government treasury apart from low borrowing from the private sector that has flooded the banking system with excess liquidity,' he said, adding that it could, however, hit the growth prospects.
The government has Rs 65 billion in its treasury at the moment, while banks and financial institutions have excess liquidity of around Rs 50 billion.
As of February 27, the government has been able to spend only 19.72 per cent capital expenditure, according to Mahat. "However, there is still an additional demand of Rs 20.89 billion but in the unproductive sectors."
The minister also said that he would cut the budget of the projects failing to spend and divert the funds to better performers.
While, the capital budget has shown poor performance, the recurrent expenditure has seen increment. "There has been an additional demand of Rs 12.84 billion under the recurrent budget by security agencies, increased salaries of government employees and a rise in expenditure for foreign trips and the Constituent Assembly (CA) election, he added.
However, the government is planning to bring guideline to reduce recurrent expenditure.
Hoping that an early budget could help ensure the better capital expenditure, he said the government is planning to bring the budget before the fiscal year ends.

Inflation target revised upward
KATHMANDU: The mid-term budget review has revised inflation upward to 8.5 per cent from eight per cent. A rise in money supply due to the second CA election and supply constraints that led to an increase in food prices pushed the inflation to double digit in the fifth month. Mahat said that food prices jumped by 13 per cent despite increased production which suggested that there is a problem in the supply system due to middlemen. The review also suggested to address supply related problems to reduce inflation, apart from monetary instrument.

Trade deficit to continue to balloon
KATHMANDU: The review has also showed serious concern on ballooning trade deficit. Trade deficit stood at Rs 288.76 billion in the first half of the current fiscal year, whereas the ministry has estimated it to reach Rs 550 billion by the end of the current fiscal year. The total trade deficit stood at Rs 480 billion in the last fiscal year. The remittance cannot help float the economy, Mahat said, adding that there is an urgent need to enhance competitiveness of domestic products and increase exports.

Budget downsized to Rs 479billion
KATHMANDU: Through the mid-term review of the current fiscal year, the government has also downsized total budget for fiscal year 2013-14 to Rs 479 billion from Rs 517.24 billion. The government revised the budget due to low capital spending during the review period, said the finance minister.

Central bank asks banks and financial institutions to appoint information officers

The central bank has directed banks and financial institutions to appoint information officer.
After National Information Commission apprised the central bank of the legal requirement to appoint information officers in banks and financial institutions according to the Right to Information Act 2007-Section 6 – that states that public body will arrange for an information officer for the purpose of disseminating information held in its office – the Nepal Rastra Bank has directed them
According to the Act, banks and financial institutions must have an information officer in their offices, and also required to open an information section for the public to be more transparent.
The banks and financial institutions should immediately appoint information officer and send the appointed officer's name, position, contact number and email address to the National Information Commission's office at the earliest.
The Act ensures the people's right to information. The public institutions should classify and update information and make them public, publish and broadcast and to make the citizens´ access to information simple and easy.